As a PhD student, I receive
- a W-2 from my school for services I provide (e.g.research / teaching assistant)
- a 1099-MISC, box 3 (Other income) for my PhD stipend, i.e. free money they are giving me that I keep and spend on what I want. It's not tuition-waiver.
I never knew how to treat my 1099-MISC income properly, so this year I decided to go to the IRS Voluntary Income Tax Assistance (VITA) program at my school. They filed a 1040A form for me, and report:
- Only my W-2 wage (line 7)
- Withheld tax from W-2 and 1099-MISC, combined (line 40)
Therefore, I'm refunded 100% of the withheld tax on my 1099-MISC. Note that I gave them both W-2 and 1099-MISC, and they attached both to the application, so it's not a unconscious mistake.
This answer says that PhD stipend is not subject to self-employment tax. But does it mean it's exempt to ALL tax, as my case seems to suggest?